Transformational Change Management Strategy

Transcription

1 Dwi Andi Rohmatika Accountancy University of Gadjah Mada Transformational Change Management Strategy BACKGROUND ABC Group is the fifth largest financial services provider in Southeast Asia by total assets, with a vision to be "Southeast Asia's most valued universal bank". ABC Group acquired two banks in Indonesia: Bank X and Bank Y. In term of assets, Bank X was the sixth largest bank in Indonesia whereas Bank Y was the tenth. To comply with the Indonesia Central Bank's "single presence policy", ABC embarked on a plan to merge these two banks. The merger would create the fifth largest bank (ABC XY Bank) by total assets of more than USD 10 billion and also among the top five in terms of distribution network in Indonesia. Two of the most important aspects of a bank merger is managing its people and the IT and operations merger integration. While the phase of IT and operations merger integration has been settled in its place, the time has come for managing the people for transition process, ranging from top executives, manager, and staff members. This paper tries to give a real action plans to solve the problems given. Therefore, using DSPA Framework to solve it will be applied through the entire paper: Definition of Problems, Issue Tree, Prioritization Matrix, and Actions Plan.

2 DEFINITION OF PROBLEMS Context Context of the problems lies on how to success ABC XY Bank in their merger process. As it is clearly stated, the ABC Group is willing to acquire two banks, Bank X and Bank Y, in Indonesia. While the single presence policy is implemented in Indonesia, ABC Group must use merger integration process towards those two entities. Issues arise on successing the integration process are: (1) managing its people and (2) the IT and operations merger integration. ABC XY Bank has come to a phase when the business and IT is in place. Thus, the next step would demand on managing the people issue. However, there are several challenges that should be addressed. Each entity is a strong player since it has its own specialty on consumer segmentation (Bank X focuses on corporate market and Bank Y focuses on consumer and commercial markets)which affects each culture of the company. Another point of interest could be the selection of talented employees to continue the management and operations. This paper will try to break the issue down based on the Transformational Change Management Methods Framework (Accenture, 2010). Stakeholders The stakeholders involved in implementing the strategy would be top executives and top management, middle management, and all employees. This is alligned with the Transformational Change Management Methods Framework given (see figure 1.1.). The stakeholders should be engaged Based on the research done, key forces actions on the stakeholders itself would be vary. For example, the role of top management (including top executives and senior managers in each department) is necessary in carrying out the responsibility to signal the kind of new company they are creating to other employees. Figure 1.1. Transformational Change Management Methods Framework Key Measurement Using journey context and content assesment along with issue definition and assesment, journey measurement could be best measured by the perception of the stakeholders towards the transformation journey. That perception (based on research done by Keller, Meaney, and Pung) includes: 1. Staff members were very able to participate in shaping those change initiatives, for example their suggestions for making a brand new organizational structure is accepted. 2. Frontline staff members feel the sense of ownership by taking the initiatives to drive change, for example those members have their own significant role in the transition team could give any insight based on their expertise. 3. Staff members think that top management is able to create clear and stretching targets in which it could be a corridor in making the action steps to reach the goal. 4. Staff members see that top management is able to define a clear structure so that they know the job descriptions and understand the company's hierarchical responsibilities clearly. 5. Staff members get the additional skills needed to allign with the new organizational structure and goals, for example the staff members who concentrated on corporate market previously acquired the skill to serve consumer and commercial markets as well. Boundaries and Limits Organizing the management integration within XY Bank has some boundaries and limits that should be addressed, for example: 1. The resources available for starting and maintaining the integration process. 2. Broad branches spreaded

3 geographically in Indonesia. 3. Resistant to change from the staff members. Problem Definition Seeing the explanation from ABC XY Bank in terms of organization and workforce transformation, the best problem definition for this case is how to make an effective process on applying complex organizational and workforce transition from the separated old organization into the integrated new one. How to make a good transformation regarding businessrelated issue? How to align the different business processes which focus on different products? How to align two different organizational hierarchy to be a completely blended structure? How to align the different using of integrated application and technology architecture? How to make integrate good the publications different legacy about systems the community? for credit card business alignment? How to make serve regular the consumer articles and commercial news on the market online as media? good as the corporate ones? How to make provide regular the various printed services bulletins like and what maps? ABC Group offers throughout the world? How to map choose the the interest suitable of the organizational members? structure? How to know distinct and the reveal members their and ideas their of responsibilities the next event? in the hierarchy? How to to unite organize each the member broad of branches the community of the banks from within their hobbies? the structure? How to arrange make the the staff flow members of the program? accept the new integrated application and technology architecture? How to make ensure good that publications the IT systems about support each business event? process? How to reach educate as all many staff students members as with possible the new by publications? IT systems? ISSUE TREE On the Transformational Change Management Methods Framework, there is initial dialogue and ongoing dialogue. The ongoing dialogue is used to apply continuos assesment based on journey assesment and issue definition and assesment. Whereas on initial dialogue, there are two main things that should be prioritized to encourage the transformation: journey planning and value management strategy. Encouraged by the commitment to proceed, these tools could be placed upon the transformation of the organization upon several main things: leadership alignment, strategy alignment, culture alignment, business process alignment, performance alignment, organization alignment, and application and technology alignment. This problem definition which is a general form of the framework will be cut down into small problems in Issue Tree (see figure 2.1.). Problem Definition: How to make an effective process on applying complex organizational and workforce transition from the separated old organization into the integrated new one? How to make a good transformation regarding peoplerelated issue? How to introduce allign the the strategy community from the different to the foreigners? approaches of business? How to align the leaders to How to attract the foreigners the new goal of the to come to Yogyakarta? organization? How to align the culture of the different banks under the goal of ABC Group? How to align different staff performance from the different bank background? Figure Issue Tree How to to get solve the the event resistant schedule to change and make behavior creative towards travel IT around systems Jogja? changing? How to determine use online whether and printed the team media will to focus publish on it? fixing the weakness from the previous organization? How to choose interoduce the the best online strategy and and distribute model to the reach printed the goal media? of the organization? How to merge get their the contact strategy person consumer and invite based personally? services with corporate based services market? How to get make the the seniors foreigners appointment? know about Yogyakarta? How to make Yogyakarta the alignment become of the the top team? most-visited list? How to to define a good role clarity of all members? How to make choose the the culture events XY of bank travelling? more universal? How to internalize arrange the ABC core value of enterpreneurship? towards XY Bank staff members? How to communicate see the needs and of society/people give clear picture around of the us new (soc form publication)? of organization to all staff members? How to to give make value all staff added/knowledge members in every as a tool branches of self feel existence? the same company culture? How to add use online different and skills printed for all media the staff to publish members it? to serve various market segmentation? How to assign interoduce the staff the online members and to distribute the suitable the jobs? printed media? How to know get their contact staff members person qualifications? and invite personally?

4 PRIORITIZATION MATRIX The small problems defined in Issue Tree needs some efforts which could give a specific impact. This Prioritization Matrix (see figure 3.1.) helps the team to put effort on the green area in which it is very effective to be done: less effort with high impact. The numbers in the area represent the small problems define in the Issue Tree. effort LOW MEDIUM HIGH LOW MEDIUM HIGH Figure Prioritization Matrix impact

5 ACTION PLAN This Action Plan describe the real actions that should be take to ensure the problems solved. Since the numbers within the green area means the things need low effort but give high impact, this paper will focus on explaining those things. Leadership Allignment Remember, the main problem we are discussing here is how the ABC XY Bank could make the transition effectively. Thus, we are talking about measuring the transformation process more than measuring the bank merger itself. As this case has been analyzed, the stakeholders mentioned should be managed in an stakeholder engagement process (see figure 1.1.). Referred to a research that emphasizes successful mergers start at the top, ABC XY Bank should develop a model which focuses on the role of top management. What is needed from the top management itself is showing the signals of ABC XY Bank they are creating and their commitment towards it. Once the signal is established, it will not only be a mere signal but it will transform into a concrete reality. This is caused by the process in which it has been through: 1. Seniors appointment It should be noted that seniors appointment towards the same goals and values of the new company will give a clear vision to another staff members about what kind of company this top executives will make. As for the ABC XY Bank, establishing a new bank that has a goal as the most universal valued bank by stregthening on consumer and commercial markets along with corporate markets is the goal of the new organization. However, there are several challenges that possibly occur, for example unwillingness to face the job losses among the close collegues who have performed well on years, the difficulties on creating the new company between the executives itself because each of them carry the characteristics from their own predecessors, and appointing managers for the wrong reasons like the political balances between those two banks merged. (Point No. 14) 2. Alignment of the top team Management allignment within this process will focus on top management as the center of the change and the staff members should be alligned around them. Thus, top management should do anything to minimize the challenge they might face. For example, they could do the team building exercise in order to minimize the negative effect of too many different perspectives among the managers in the company. (Point No. 15) 3. Role clarity This model will differentiate clearly the job description of team members and what they could do to success the merger integration process. will cooperate to make an effective transition which could be measured on the milestones achieved, those are journey measurement and value realization. (Point No. 16) Performance Alignment Performance alignment within staf members in the company has been justified as a necessary things in determining the success of management integration. These could be described on several things in different dimensions. 1. Adding skills to staff members Staff members who previously worked for Bank X which focuses on corporate market has a specific skills to serve the best for the customers. However, the staff members who previously worked for Bank Y which focuses on consumer and commercial market has a specific skill to give the best service for its market segmentation, for example focusing on hospitality. Therefore, ABC XY Bank should train and make any group discussion forum to give additional skills to the staff members to ensure that all staff members could serve all market segmentations, corporate and commercial markets. (Point No. 21) 2. Staff members qualifications Each staff member has their own skills. On the other hand, each position requires a specific qualification. Thus, assign people on the jobs suitable is a right thing to do. However, knowing what the staff members want to work on, especially after merger of the entities, would be much wiser to accomodate their wants. (Point No. 22) 3. The right man on the right place Without considering any other factors such as the age of the workers or the years they spend on working for the company, the ones who have specific skills needed to finish a specific task should be assigned. (Point No. 23) Business Process Alignment There are two main things ABC XY Bank should focus in order to make the management integration more effectively done. 1. Legacy systems for credit card business alignment Since the customers of ABC XY Bank is vary, there was a significant difference on serving process. Therefore, the credit card business alignment service will be run to focus on corporate by giving special credit card limit for corporate issuance and focus also on

6 comercial markets by giving many promotions and discounts. 2. Services to commercial market and corporate market Business process to commercial market and corporate market is slightly different. Corporate market needs many negotiatons which could give the benefits to both parties while commercial market tends to give the best service to individual. Therefore, the business process could be diferentiated into two department which specialized on each market. It is suggested since it could encourage future research and development on the certain market. Culture Alignment Culture is something that could not be built in one night only. This process needs continuos improvement to be perceived as a culture which is in line with company's values and individual values also. 1. ABC XY Bank as a universal bank The cultures involved in ABC XY Bank are not only the cultures of Bank X and Bank Y, but also the culture of Bank ABC Group. Therefore, since ABC Group highly strengthening its goal on ecoming the universal bank, ABC XY Bank should be such a bank also. It could be done in several ways, one of them is setting the website in english language. 2. Communicating the new way of organization to staff members To ensure the culture alignment within the new organization, the top management should be able to communicate effectively to various media to staff members about the new way organization will run its business. It could be set in formal way, using the meeting, conference, and bulletins. Another way is set in the informal way, using chatting forum, company's new anthem, or simple but meaningful contest or gathering. Reference Accenture Framework, DSPA Framework, Workshop Young Leaders for Indonesia (YLI) McKinsey Indonesia Strategic Test from Four Senior Executives, Gilmartin, et. al., McKinsey Quarterly Publishing Successful Mergers Start at The Top, Fubini, et. al., McKinsey Quarterly Publishing What Successful Transformations Share, Keller, et. al., McKinsey Quarterly Publishing The Psychology of Change Management, Price and Lawson, McKinsey Quarterly Publishing Taking Organizational Redesign from Plan to Practice, Ghislanzoni et. al., McKinsey Quarterly Publishing